Overdraft fee income down, other checking account fees steady, reports CFPB

In a report issued by the Consumer Financial Protection Bureau (CFPB) last week, the agency announced that banks’ reported overdraft fee income “was 43% lower in the third quarter of 2022 than in the third quarter of 2019 before the COVID-19 pandemic onset – suggesting $5.1 billion less in fees on an annualized basis.”

Despite trade groups and financial services organizations warning that legislation controlling overdraft fees would result in higher checking account fees elsewhere, the CFPB also announced that it had not observed a correlating increase in those fees.

The report, which addressed only such income for banks and not credit unions, indicated that overdraft and non-sufficient funds (NSF) fee income has trended down since the fourth quarter of 2021 as financial institutions voluntarily lower or eliminate the fees to get ahead of legislation and take advantage of the good-will among consumers generated by the move.

The CFPB did add a caveat regarding 2020 data, suggesting that the COVID-relief stimulus packages drove fee income down in the second quarter thanks to the increased checking balances nationwide. In fact, fee income nearly halved from Q1 to Q2 in that year.

 

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